TV advertising faces biggest spending slump since financial crisis

TELEVISION advertising is on track for its worst year since the financial crisis, in a blow to traditional broadcasters.

Spending on TV ads is expected to have fallen 7.3pc in 2023, according to the latest industry figures, which follows a 3pc third-quarter downturn.

Stripping out the impact of sponsorship deals and video-on-demand, the decline is forecast to be even deeper at 12.4pc, according to the Advertising Association and consultancy Warc.

This would represent the biggest advertising slump since the great recession, excluding the effects of the pandemic in 2020. TV ad spend fell just under 10pc in 2009.

The figures reveal the extent of the challenge facing commercially funded broadcasters with tough competition from streaming rivals such as Netflix and Disney.

Both Channel 4 and ITV have sounded the alarm over the downturn, warning that the industry was facing its biggest financial fall in 15 years.

Alex Mahon, the Channel 4 chief execu- tive, has described the slowdown as a “market shock” and said the public service broadcaster was considering using its emergency £75m debt facility to shore up its finances.

Advertising has been one of the biggest victims of the inflation crisis as brands cut back spend amid growing uncertainty.

But the television sector has been particularly affected as viewers defect to streaming rivals and advertisers shift their money to online formats. Broadcasters’ own streaming platforms have proven more resilient and are on track to grow more than 16pc in 2023. However, this remains a small proportion of the companies’ overall advertising revenue. The forecasts show TV advertising spend is expected to return to growth in 2024, increasing 1.4pc.

But this represents a lacklustre recovery compared with previous downturns. TV ad spend jumped 16pc in 2010 following the financial crisis and 24pc as the country emerged from lockdowns in 2021.

Meanwhile, companies continue to pump money into other media formats.

Search and online display advertising are to grow 11pc and 13pc respectively in 2023 as tech giants such as Google and Facebook continue to sweep up advertising revenue. Billboard advertising, known as out-of-home, and cinemas also enjoyed growth last year.

Overall, the UK ad market is now thought to have grown 6.4pc in 2023 to £37bn, outstripping previous forecasts.

Stephen Woodford, chief executive of the Advertising Association, said the figures “demonstrate advertisers’ continued commitment to investing in their brands, despite the lack of overall growth and stubborn inflationary pressures in the UK economy”.